Does executive compensation affect firms’ acquisition decisions? Evidence from China

Jiang, Lin and Kling, Gerhard and Bo, Hong (2020) Does executive compensation affect firms’ acquisition decisions? Evidence from China. Asia Pacific Business Review.

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Abstract

Exploiting regulatory changes in China that govern the use of stock options, we investigate whether executive compensation affects acquisition decisions and post-acquisition performance from 2005 to 2014. We find that acquisitions are not driven by stock options. Managerial stock ownership promotes acquisitions at low levels of ownership – but leads to less frequent acquisitions at higher levels, implying a non-linear relationship. Similarly, we also find a non-linear impact of managerial stock ownership on long-term post-acquisition performance. However, neither stock options nor stock ownership determine short-term post-acquisition performance. Finally, state ownership has a significant impact on the compensation-acquisition relationship in that the above relationships only exist in private enterprises.

Item Type: Article
Additional Information and Comments: This is an Accepted Manuscript of an article published by Taylor & Francis in Asia Pacific Business Review on 28th October, 2020, available online: http://www.tandfonline.com/10.1080/13602381.2020.1834736.
Faculty / Department: Faculty of Arts & Humanities > Business School
Depositing User: Lin Jiang
Date Deposited: 18 Jan 2021 11:39
Last Modified: 18 Jan 2021 11:39
URI: https://hira.hope.ac.uk/id/eprint/3185

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